Rama authorized to receive P15 million from Globe Telecom

CEBU, Philippines - The Cebu City Council authorized Acting Mayor Michael Rama to sign the memorandum of agreement with Globe Telecom that would allow him to accept the firm’s franchise tax amounting to P15 million.

The payment will be made even if Globe did not admit it has an obligation to pay franchise taxes to local government units.

Councilor Jose Daluz III, chairman of the council committee on budget and finance, said it was clearly stated in the MOA that the P15 million is “not the exact amount of franchise tax” of Globe for 2006, 2007 and 2008.

While the telecommunications firm is very willing to pay the city with the said amount, and an “additional P5 million every year thereafter”, Globe did not admit it has an obligation as such to settle to the city government.

“Short of, and to avoid litigation and improve business relations, the parties, each without necessarily admitting the other’s position, have agreed to enter into this agreement by way of setting amicably their differences,” Daluz said.

Mayor on-leave Tomas Osmeña earlier said that those telecommunications companies which will not cooperate with the city would also “not get cooperation from the city government.”

The city wants to collect franchise tax of 75 centavos for every P100 of their income in Cebu City.

Globe officials have insisted that the law excluded their company from paying franchise tax to the LGUs, but still Globe is willing to pay the city without admitting that they are obliged to do it. In 2003, Globe paid the city P35 million as “compromise fee” in lieu of the payment for franchise tax while Smart also paid the city P3.78 million in “miscellaneous taxes”.

Acting city attorney Rodolfo Golez strongly recommended for the acceptance of such payment from Globe Telecom. — Rene U. Borromeo/MEEV   (THE FREEMAN)